Mahindra Agrees to Purchase of Car-Designer Pininfarinaby and
Deal, including credit guarantees, valued at $185 million
Pininfarina stock plunges on low offer for outstanding shares
Mahindra, together with affiliate Tech Mahindra Ltd., will buy a 76 percent stake from holding company Pincar for 25.3 million euros, or the equivalent of 1.10 euros a share, the Mumbai-based company said Monday in a statement. The Indian company will offer the same price for the remaining stock, which closed Friday almost four times higher at 4.20 euros. The stock plunged 69 percent to 1.31 euros.
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“The legendary high-end design credentials of Pininfarina will significantly enhance the design capabilities of the entire Mahindra group,” Chairman Anand Mahindra said in the statement. “Given the increasing design sensibilities of today’s consumers, product design will greatly influence customer choice.”
The takeover of Pininfarina, the creator of numerous Ferraris including the 458 Spider roadster, marks the latest international expansion by Mahindra following its acquisitions of South Korean carmaker Ssangyong and the motorcycle unit of French auto manufacturer PSA Peugeot Citroen. The designer already cooperates with Mumbai-based Mahindra on SUV development and worked with it on the Halo electric sports-car concept unveiled last year.
In addition to buying stock, Mahindra will invest 20 million euros in Pininfarina and provide a guarantee to creditors of 114.5 million euros.
Pininfarina, which has been unprofitable for 10 of the past 11 years while struggling with debt, shut a floundering division that built cars for other manufacturers three years ago. Following the Mahindra deal, it will remain an independent company with a separate listing in Milan, according to the statement. Paolo Pininfarina, a grandson of the company’s founder, will remain chairman.
Pinfarina is “a jewel,” Tech Mahindra’s CEO Chander Prakash Gurnani said at a press conference in Turin. “It will continue to be polished. It will continue to be built better now we have the financial muscles to build it.”
The deal is expected to close in the first half of 2016. Mahindra was advised by Rothschild & Co., while EY advised Pininfarina.